Could economic victory mean election defeat?

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The Chancellor’s determination to stick to the path of austerity risks a return to the party’s old nasty image

George Osborne likes to tell guests who come for dinner at No 11 about a famous discussion that took place at the table around which they are eating. It was, he recalls over the starter, in the beautiful wood-panelled dining room, designed by Sir John Soane, that Winston Churchill, then Chancellor of the Exchequer, was persuaded by Montagu Norman, the Governor of the Bank of England, to return to the gold standard. The decision in 1925 — fiercely resisted by John Maynard Keynes — had far-reaching consequences for the British economy and is widely thought to have contributed to the Great Depression.